1 


The  Prospects  for  Build- 
ing Construction  in  Ameri- 
can Cities 

by 
Leonard  P.  Ayres 


UNIVERSITY  OF  CALIFORNIA 
AT    LOS  ANGELES 


THE  PROSPECTS  FOR 

BUILDING  CONSTRUCTION 

IN  AMERICAN  CITIES 


BY 
LEONARD  P.  AYRES 

VICE-PRESIDENT.  THE  CLEVELAND  TRUST  COMPANY 


Cleveland 
trust  Company 


ECONOMIC  REPORTS  OF 
THE  CLEVELAND  TRUST  COMPANY 


PRICE  CHANGES  AND  BUSINESS 
PROSPECTS 

JUNE,  1921 


THE  AUTOMOBILE  INDUSTRY 
AND  ITS  FUTURE 

JULY,  1921 


BUSINESS  RECOVERY  FOLLOWING 
DEPRESSION 

MAT,  1922 


THE  NATURE  AND  STATUS 
OF  BUSINESS  RESEARCH 

JUNE.  1922 


THE  PROSPECTS  FOR  BUILDING  CONSTRUC- 
TION IN  AMERICAN  CITIES 

JUNE,  1922 


THE  PROSPECTS  FOR 

BUILDING  CONSTRUCTION 

IN  AMERICAN  CITIES 


BY  . 

LEONARD  P.  AYRES 

VICE-PRESIDENT,  THE  CLEVELAND  TRUST  COMPANY 


Cleveland 
{Crust  Company 


Published  June,  1922 
5,000  Copies  Printed 


Copyright,  1922,  by 
THE  CLEVELAND  TRUST  COMPANY 


vo 


THE  PROSPECTS  FOR  BUILDING  CONSTRUC- 
TION IN  AMERICAN  CITIES 

Since  the  outbreak  of  the  war  in  1914  a  great  shortage  of 
building  construction  has  been  accumulating  in  this  country. 
When  war  was  declared,  in  the  summer  of  1914,  business  was 
depressed  and  less  than  the  normal  amount  of  new  building  was 
being  done.  In  1915  business  recovery  was  under  way  and  the 
amount  of  building  construction  increased  in  that  and  the  fol- 
lowing year,  but  not  in  sufficient  volume  to  meet  current  needs. 
The  country  was  entering  upon  a  period  of  great  war-time 
prosperity  for  commerce  and  industry,  and  available  funds 
went  into  industrial  production  rather  than  into  general  build- 
ing. Then  came  our  own  entry  into  the  war,  and  in  even  greater 
measure  the  money  and  energy  of  the  nation  were  diverted  to 
the  production  of  war  supplies  and  munitions  and  necessary 
military  construction,  instead  of  going  into  the  normal  building 
of  homes,  stores,  office  buildings,  factories,  schools,  and  other 
peace-time  structures. 

As  the  war  progressed  the  building  deficit  increased,  for  the 
as  Government  stepped  in  and  prevented  all  save  the  most  essen- 
J5  tial  building  operations.  After  the  armistice  the  shortage  still 
ca  continued  to  accumulate,  for  building  wages  and  the  costs  of 
a-  material  mounted  to  such  heights  in  1919  and  1920  as  to  dis- 
:c  courage  the  undertaking  of  new  construction  projects. 

As  a  result  of  these  restraining  influences  this  country  has  not 

1    constructed  in  the  past  few  years  as  many  new  buildings  as  it 

•±    would  have  in  ordinary  times.     The  present  publication  is  the 

report  of  a  study  carried  through  with  the  object  of  finding  how 

great  the  existing  building  shortage  probably  is  and  where  it  is 

most  acute. 

[3] 


353705 


BUILDING  PERMITS 

There  are  no  official  statistics  compiled  in  this  country  to  show 
the  amount  of  building  in  progress  or  projected  from  month  to 
month  or  by  yearly  totals.  There  are  several  compilations  of 
the  amounts  of  building  permits  granted  by  municipalities,  and 
the  F.  W.  Dodge  Company  of  New  York  publishes  monthly 
reports  of  contracts  awarded  in  27  states.  For  the  present  pur- 
pose data  were  needed  showing  the  amounts  of  building  under- 
taken in  the  same  localities  over  a  long  series  of  years,  for  only 
by  using  such  figures  can  trustworthy  inferences  be  reached  as 
to  the  approximate  shortages  of  building  in  any  given  years. 

Accordingly  figures  have  been  compiled  by  the  writer  giving 
the  amounts  of  the  building  permits  granted  in  50  cities  during 
the  past  22  years.  Most  of  these  data  were  taken  from  the 
reports  of  the  U.  S.  Department  of  the  Interior.  Where  it  was 
possible  to  secure  missing  data  from  the  files  of  Bradstreet's  that 
was  done,  and  in  the  remaining  cases  the  figures  were  secured 
through  corresponding  with  the  building  departments  of  the 
cities  concerned.  These  cities  from  which  the  building  permit 
figures  have  been  secured  for  each  year  from  1900  through  1921 
are  the  folio  wing: 


New  England: 

East  North  Central: 

Southern: 

Boston 

Chicago 

Atlanta 

Cambridge 

Cincinnati 

Baltimore 

Fall  River 

Cleveland 

Louisville 

Hartford 

Columbus 

Memphis 

Lowell 

Dayton 

Nashville 

New  Bedford 

Detroit 

New  Orleans 

New  Haven 

Grand  Rapids 

Richmond 

Providence 

Indianapolis 

Washington 

Worcester 

Milwaukee 

Western: 

Middle  Atlantic: 

Toledo 

Denver 

Buffalo 

West  North  Central: 

Los  Angeles 

Jersey  City 

Kansas  City,  Kansas 

Oakland 

Newark 

Kansas  City,  Mo. 

Portland 

New  York 

Minneapolis 

San  Francisco 

Philadelphia 

Omaha 

Seattle 

Pittsburgh 

St.  Joseph 

Reading 

St.  Louis 

Rochester 

St.  Paul 

Scranton 

Syracuse 

[4] 


Building  permit  figures  are  only  relatively  trustworthy  indica- 
tors of  the  amount  of  building  actually  done.  In  some  cases 
permits  are  secured  and  later  on  the  project  is  given  up.  More 
frequently  the  final  costs  of  the  building  are  greater  than  was 
expected  and  so  the  permit  figures  are  too  low.  These  inac- 
curacies tend  in  some  degree  to  counterbalance  one  another.  A 
more  important  consideration,  however,  is  that,  while  permit 
figures  probably  understate  the  cost  of  the  buildings  actually 
completed,  they  almost  surely  have  in  the  long  run  an  approxi- 
mately steady  and  reliable  relationship  to  the  actual  costs,  and 
so  constitute  good  measures  by  which  to  infer  the  amounts  of 
shortage  or  surplus  of  the  construction  actually  carried  through 
to  completion. 

The  upright  columns  of  Diagram  1,  on  page  6,  indicate  the 
number  of  millions  of  dollars'  worth  of  building  permits  granted 
in  the  50  cities  each  year  from  1900  through  1921.  These 
cities  had  an  aggregate  population  of  15,231,000  in  1900,  which 
increased  to  24,994,000  in  1920.  They  include  nearly  one- 
fourth  of  all  the  people  in  the  country. 

The  figures  show  a  rapid  growth  in  permit  value  from  243 
millions  in  1900  to  706  millions  hi  1906.  Then  there  was  a 
decline  in  the  value  of  building  operations  during  the  depression 
of  1907  and  1908,  followed  by  a  recovery  and  later  on  by  another 
decline  in  the  depressed  years  of  1914  and  1915.  The  abnor- 
mally low  volume  of  building  operations  in  1917  and  1918  is 
clearly  shown,  as  well  as  the  high  figures  reached  hi  1919,  1920, 
and  1921. 

COST  OF  BUILDING 

The  figures  showing  the  number  of  millions  of  dollars'  worth  of 
permits  granted  each  year  do  not  accurately  indicate  the  rela- 
tive amounts  of  construction  actually  undertaken,  for  during 
this  period  the  costs  of  building  varied  greatly,  and  the  high 
figures  of  the  three  years  folio  wing  the  war  do  not  represent  any- 
thing like  as  many  houses,  stores,  and  factories  as  they  would 
have  if  this  building  had  been  done  at  the  much  lower  costs  that 
prevailed  a  few  years  earlier. 

[5] 


In  order  to  make  adjustments  for  these  varying  costs  an 
index  number  of  the  cost  of  building  has  been  worked  out,  and 
as  a  matter  of  interest  it  has  been  carried  back  all  the  way  to 
1840.  It  attempts  to  show  about  what  the  relative  cost  of 
building  would  have  been  in  each  year  over  this  82  year  period 
if  twe  ake  the  cost  in  1913  as  being  represented  by  100. 


Diagram  1. — Millions  of  dollars'  worth  of  building  permits  granted  in  50  cities 
each  year  from  1900  through  1921 

In  constructing  this  index  number  for  the  cost  of  building  it 
has  been  assumed  that  in  the  typical  construction  operation  the 
expense  for  materials  is  60  per  cent  of  the  total,  and  that  for 
wages,  40  per  cent.  In  computing  labor  cost  the  wages  of  the 
building  artisans  have  been  given  twice  as  heavy  a  weighting 
as  those  for  building  laborers. 

This  index  is  one  originally  worked  out  by  the  Federal  Re- 
serve Bank  of  New  York  for  the  years  from  1913  to  1922  and 

[6] 


carried  back  by  the  present  writer  to  1840.  The  data  from 
1840  to  1890  are  taken  from  the  Falkner  report  made  to  the 
U.  S.  Senate  Committee  under  the  chairmanship  of  Senator  Al- 
drich.  The  later  figures  are  from  the  reports  of  the  U.  S. 
Department  of  Labor. 

The  data  for  the  cost  of  materials  are  those  used  for  Building 
Materials  by  the  United  States  Bureau  of  Labor  Statistics, 
modified  by  the  inclusion  of  cost  figures  for  Metals  and  Metal 
Products  since  1890,  to  allow  for  the  increasing  use  of  structural 
steel  in  building  construction.  These  metal  figures  were  given 
a  weight  of  only  2  per  cent  of  the  whole  cost  for  building 
materials  in  1891  and  increased  by  two  points  each  year  up  to 
1900,  since  which  time  they  have  been  given  a  weight  of  20  per 
cent  each  year. 

The  results  of  combining  all  these  figures  over  this  long  span 
of  years  are  shown  on  Diagram  2,  in  which  the  upper  dashed 
line  shows  the  course  of  material  prices,  the  lower  dotted  line 
that  of  wage  costs,  and  the  solid  line  the  cost  of  building  in  each 
year  from  1840  through  1921.  The  costs  for  each  year  are 
expressed  as  relative  to  the  costs  in  1913,  if  those  are  repre- 
sented as  100.  Beginning  in  1840  the  cost  of  building  ran 
along  for  about  twenty  years  at  a  level  slightly  above  50.  That 
is  to  say,  that  during  these  years  building  was  only  a  little  more 
than  half  as  costly  as  it  was  in  1913. 

Then  in  1861  came  the  Civil  War  and  a  great  increase  in  the 
cost  of  materials,  which  carried  the  cost  of  building  up  to  nearly 
two  and  a  half  times  what  it  was  just  before  the  war.  From 
this  high  point  the  cost  of  construction  fell  rapidly,  with  one 
notable  interruption,  for  some  fifteen  years.  It  then  ran  along 
without  important  fluctuations  for  twenty  years  more,  and 
then  began  the  long  rise  from  1898  to  1915.  With  the  advent 
of  the  war  with  Germany  the  prices  of  materials,  the  costs  for 
wages,  and  the  level  of  building  costs  shot  up  until  the  peak  was 
reached  in  1920. 

It  is  interesting  to  note  that  the  increase  in  the  cost  of  build- 
ing during  and  following  the  World  War  was  relatively  only 

[7] 


[8] 


slightly  greater  than  that  which  occurred  during  the  Civil  War. 
From  1860  to  1864  the  cost  of  building  increased  by  136  per 
cent,  and  in  the  first  year  after  the  peak  of  prices  the  decline 
was  12  per  cent. 

In  the  case  of  the  World  War  building  costs  increased  from 
1914  to  1920  by  153  per  cent,  and  then  fell  in  the  first  year  of 
decline  24  per  cent.  Thus  it  appears  that  both  the  increase  and 
the  immediate  decline  in  building  costs  have  been  somewhat 
more  violent  this  time  than  in  the  case  of  the  Civil  War,  but 
not  much  more.  It  would  be  interesting  to  speculate  on  the 
probability  that  building  costs  may  continue  to  decline  irregu- 
larly over  a  long  period  of  years  to  come,  as  they  did  after  the 
Civil  War,  but  this  does  not  fall  within  the  province  of  the 
present  report. 

TABLE  1.— RELATIVE  COST  OF  BUILDING  SINCE  1840  IF  COSTS  IN 
1913  ARE  TAKEN  AS  100 


Final 

1840 

1850 

1860 

1870 

1880 

1890 

1900 

1910 

1920 

figure 

to 

to 

to 

to 

to 

to 

to 

to 

to 

of  date 

1849 

1859 

1869 

1879 

1889 

1899 

1909 

1919 

1929 

0 

55.3 

52.5 

53.6 

88.3 

70.7 

69.2 

75.1 

98.9 

247.1 

1 

56.2 

50.6 

60.7 

88.8 

72.1 

68.3 

76.3 

97.6 

189.0 

2 

55.1 

51.9 

77.5 

93.2 

74.5 

66.4 

79.2 

97.6 

3 

53.5 

53.5 

94.1 

93.5 

72.0 

66.9 

81.7 

100.0 

4 

52.7 

58.3 

126.6 

87.7 

70.7 

64.4 

82.1 

97.6 

5 

54.3 

54.3 

112.3 

81.1 

70.0 

64.2 

85.6 

97.8 

6 

54.6 

54.4 

105.9 

77.0 

71.8 

64.4 

92.4 

108.1 

7 

55.6 

55.6 

103.8 

71.8 

69.7 

63.4 

96.8 

128.1 

8 

54.6 

54.8 

100.9 

65.7 

69.8 

65.3 

91.4 

143.2 

9 

51.3 

53.3 

100.1 

66.2 

69.7 

73.1 

91.7 

170.9 

The  figures  showing  the  computed  dost  of  building  each  year 
are  given  in  Table  1.  This  table  must  be  used  differently  from 
the  ordinary  one.  The  first  number  hi  the  body  of  the  table  is 
55.3  and  this  indicates  that  the  relative  cost  of  building  in  1840 
was  55.3.  In  1841  it  was  56.2,  hi  1842  it  was  55.1,  and  so  on 
down  the  column.  The  ten  numbers  of  the  column  are  the  cost 
of  building  data  for  the  decade  beginning  in  1840,  and  the  year 
of  the  decade  is  indicated  by  the  numbers  from  0  to  9  in  the 

[9] 


column  at  the  extreme  left.  To  find  the  cost  of  building  in 
1865  one  would  look  at  the  number  in  the  row  opposite  5,  and 
in  the  column  entitled  "1860  to  1869."  The  number  opposite  5 
in  that  column  is  112.3. 

These  data  for  the  cost  of  building  are  probably  fairly  accurate 
indicators  of  the  varying  cost  of  general  construction  in  the 
country  as  a  whole  over  the  years  indicated.-  They  are  almost 
surely  better  measures  of  the  cost  of  building  residences  and 
small  commercial  buildings,  than  for  large  industrial  and  office 
building  construction. 


TABLE  2.— COST  OF  BUILDING  BY  MONTHS,  USING  OLD  SERIES  OF 
MATERIAL  PRICES 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

1920 

1921 

1922 

January 

100 

98 

96 

104 

115 

131 

149 

218 

211 

183 

February 

101 

99 

97 

105 

117 

133 

150 

237 

202 

.483 

March 

101 

99 

97 

107 

119 

136 

150 

251 

195 

182 

April 

101 

99 

97 

108 

123 

137 

148 

261 

191 

May 

101 

98 

98 

109 

125 

140 

153 

263 

189 

June 

101 

98 

98 

108 

133 

143 

163 

261 

186 

July 

100 

98 

98 

107 

138 

146 

169 

260 

184 

August 

99 

98 

97 

107 

138 

148 

181 

258 

183 

September 

99 

97 

97 

108 

136 

150 

191 

253 

180 

October 

99 

97 

98 

109 

131 

150 

193 

250 

180 

November 

99 

96 

99 

111 

130 

153 

197 

230 

182 

December 

98 

96 

101 

115 

131 

152 

208 

225 

185 

Average 

100 

98 

98 

108 

128 

143 

171 

247 

189 

Since  the  construction  of  this  index  the  United  States  Bureau 
of  Labor  Statistics  has  issued  a  new  index  number  for  the  cost 
of  building  materials  that  is  very  different  from  the  one  that 
it  has  hitherto  published. 

It  is  based  on  more  kinds  of  materials  priced  in  a  wider  range 
of  markets,  and  it  gives  greater  weight  to  metals.  Its  weight- 
ings are  based  on  the  relative  amounts  of  production  of  the 
different  articles  in  1919  instead  of  in  1909,  as  were  those  of 
the  old  index. 

[10] 


Because  of  the  interest  that  exists  with  regard  to  the  varying 
cost  of  building,  the  two  indexes,  based  on  the  old  figures  of  the 
Bureau  of  Labor  Statistics  and  on  the  new  figures,  have  been 
worked  out  by  months  since  1913.  The  figures  using  the  old 
data  for  material  costs  are  presented  in  Table  2,  and  those 
using  the  new  data  are  given  in  Table  3.  The  old  series  has 
been  used  throughout  the  present  study.  In  the  opinion  of  the 
writer  it  gives  results  that  are  reasonably  trustworthy  as  show- 
ing the  changes  in  the  general  cost  of  building.  Its  figures  for 
1921  and  1922  are  probably  somewhat  high. 


TABLE  3.— COST  OF  BUILDING  BY  MONTHS,  USING  NEW  SERIES  OF 
MATERIAL  PRICES 


1913 

1914 

1915 

1916 

1917 

1918 

1919 

1920 

1921 

1922 

January 

100 

96 

94 

107 

125 

142 

157 

232 

193 

167 

February 

101 

96 

94 

109 

126 

142 

155 

246 

186 

166 

March 

102 

97 

95 

112 

129 

144 

154 

250 

182 

165 

April 
May 

102 
102 

96 
96 

95 
97 

114 
114 

136 
139 

147 
150 

153 
160 

254 
252 

177 
175 

165 
168 

June 

101 

97 

97 

114 

145 

152 

173 

241 

171 

July 

99 

96 

97 

114 

145 

156 

186 

238 

169 

August 

99 

97 

97 

114 

145 

158 

197 

236 

167 

September 

99 

96 

98 

117 

145 

159 

200 

231 

167 

October 

99 

95 

100 

116 

139 

157 

200 

222 

169 

November 

98 

94 

101 

118 

139 

157 

203 

207 

171 

December 

98 

94 

104 

121 

140 

157 

215 

200 

168 

Average 

100 

96 

97 

114 

138 

152 

180 

234 

175 

The  new  data  are  probably  more  nearly  trustworthy  than  the 
old  ones.  In  so  far  as  the  results  of  this  study  are  concerned, 
it  makes  little  difference  which  series  is  used.  Computations 
utilizing  the  old  series  result  in  an  indicated  shortage  slightly 
greater  than  would  be  the  case  if  the  new  figures  were  employed. 
It  is  interesting  to  note  that  according  to  these  new  figures  the 
increase  in  the  cost  of  building  during  the  recent  period  of  high 
prices  was  relatively  no  greater  than  it  was  during  the  corres- 
ponding period  of  the  Civil  War. 

[11] 


VOLUME  OF  BUILDING  ON  1913  COST  BASIS 
By  using  the  figures  of  Table  1  it  is  possible  to  revise  the  permit 
figures  for  the  50  cities,  so  as  to  show  the  relative  value  of  the 
construction  that  would  have  been  done  in  each  year  if  the  cost 
of  building  had  remained  constantly  at  the  1913  level.  Thus 
the  first  column  of  Diagram  1  on  page  6  shows  that  the  value 
of  the  permits  issued  in  the  50  cities  in  the  year  1900  was  243 
million  dollars.  But  Table  1  shows  that  the  cost  of  building 
in  that  year  was  only  three-fourths  as  great  as  it  was  in  1913. 
This  means  that  if  the  volume  of  new  construction  actually 
undertaken  had  been  paid  for  at  the  1913  prices,  it  would  have 
cost  four-thirds  as  much  money,  or  324  million  dollars. 

In  a  similar  way  the  figures  of  each  column  of  Diagram  1  can 
be  converted  to  the  1913  price  basis  and  when  this  is  done  the 
results  are  those  that  are  shown  in  Diagram  3  on  page  13. 
This  diagram  is  simply  the  first  diagram  converted  to  the  1913 
price  basis,  and  since  actual  prices  were  lower  in  the  first  part 
of  the  period,  and  higher  in  the  latter  part,  than  in  1913,  the 
columns  of  the  diagram  representing  the  earlier  years  are 
increased  in  height,  and  the  later  ones  are  shortened,  just  as 
that  for  1900  was  increased  when  converted  to  the  1913  base. 

BUILDING  PER  CAPITA  OF  POPULATION 

The  columns  of  Diagram  3  show  the  volume  of  new  building, 
as  measured  by  its  value,  that  was  undertaken  in  these  50 
cities  over  this  22  year  period  after  the  costs  have  all  been  put 
on  the  1913  price  basis.  They  show  a  rapid  increase  over  the 
first  six  years,  an  irregular  fluctuation  around  a  level  at  about 
700  millions  for  about  twelve  years,  and  a  clearly  evident  short- 
age during  the  war  years  and  those  since  the  war. 

It  is  to  be  remembered,  however,  that  the  population  of  these 
cities  was  increasing  rapidly  during  this  period.  It  was  about 
15,000,000  in  1900  and  about  25,000,000  in  1922.  A  year  by 
year  comparison  will  be  more  trustworthy  if  the  figures  are 
converted  once  more  to  show  what  the  amount  of  building  was 
per  capita  of  the  population. 

[12] 


The  results  of  this  new  computation  are  shown  in  the  columns 
and  figures  of  Diagram  4,  which  indicate  the  number  of  dollars' 
worth  of  new  construction  undertaken  each  year  for  each  person 
in  the  populations  of  these  cities.  The  1913  cost  basis  is  used 
throughout  and  the  populations  have  been  carefully  estimated 
for  each  of  the  years  between  the  census  years. 

In  1900  the  value  of  new  building  undertaken  was  $21  per 
person,  as  is  shown  by  the  first  column  of  the  diagram.  It  rose 


Diagram  3. — Millions  of  dollars'  worth  of  building  permits  granted  in  50  cities 
each  year  from  1900  through  1921,  after  figures  have  been  converted  to  what  they 
would  have  been  if  costs  of  building  had  been  at  the  1913  level  during  entire 
period 

rapidly  until  it  reached  $44  in  1905  and  then  fluctuated  until 
1916,  when  it  was  $34.    At  this  point  the  serious  shortage 
began  to  develop.     In  1917  the  per  capita  amount  fell  to  $18, 
and  in  1918  to  $9.     The  three  years  since  then  have  shown 
increases,  but  the  totals  have  been  far  below  normal  amounts. 
Running  through  Diagram  4  there  is  a  heavy  slanting  line. 
[13] 


This  indicates  the  estimated  normal  amount  of  building  over 
this  period.  It  is  a  line  drawn  by  the  mathematical  method 
of  least  squares,  and  it  is  based  on  the  data  for  the  years  from 
1900  through  1916.  It  may  be  defined  as  a  line  that  represents 
more  accurately  than  could  any  other  line  that  might  be  drawn 


Diagram  4. — Value  of  building  permits  per  capita  of  population  for  50  cities  each 
year  from  1900  through  1921  after  data  have  been  converted  to  1913  cost  basis. 
Straight  line  shows  general  trend  from  1900  through  1916 

the  general  trend  of  the  irregular  series  of  amounts  indicated 
by  the  columns  for  the  years  from  1900  through  1916.  At  its 
right  hand  end  this  line  has  been  extended  in  a  dashed  line  and 
the  difference  between  the  columns  from  1916  on,  and  the 
height  of  this  line  above  the  base,  is  taken  to  show  the  amount 

[14] 


of  the  existing  building  shortage  at  the  beginning  of  1922.  The 
detailed  figures  on  which  the  diagrams  for  the  50  cities  are 
based  are  given  in  Table  4. 

TABLE  4.— VALUE  OF  BUILDING  PERMITS  IN  MILLIONS  OF  DOLLARS 
IN  50  CITIES  EACH  YEAR  FROM  1900  THROUGH  1921,  THEIR 
VALUE  CONVERTED  TO  THE  BASIS  OF  THE  COST  OF  BUILD- 
ING IN  1913,  AND  THEIR  VALUE  PER  CAPITA  OF  POPULATION 
EACH  YEAR  ON  THE  1913  COST  BASIS 


Year 

Value  of 
building  permits 
(millions) 

Value  of 
building  permits 
on  1913  basis 
(millions) 

Per  capita 
value  of  permits 
on  1913  cost  basis 

1900 

243.3 

324.0 

$21.27 

1901 

355.4 

465.8 

29.64 

1902 

385.7 

487.0 

30.07 

1903 

415.5 

508.6 

30.48 

1904 

480.5 

585.2 

34.09 

1905 

659.5 

770.4 

43.64 

1906 

705.6 

763.7 

42.10 

1907 

653.7 

675.3 

36.26 

1908 

572.6 

626.5 

32.78 

1909 

786.2 

842.6 

42.99 

1910 

735.8 

743.2 

37.00 

1911 

718.0 

734.9 

35.72 

1912 

770.5 

789.5 

37.48 

1913 

693.4 

693.4 

32.17 

1914 

643.7 

658.8 

29.88 

1915 

671.9 

687.7 

30.52 

1916 

845.7 

782.3 

33.97 

1917 

535.7 

418.2 

17.78 

1918 

321.9 

224.9 

9.37 

1919 

998.4 

584.2 

23.84 

1920 

1079.3 

436.8 

17.48 

1921 

1298.9 

687.2 

26.96 

SHORTAGES  IN  THE  INDIVIDUAL  CITIES 

On  the  six  pages  which  follow  are  50  small  diagrams  showing 
the  per  capita  amounts  of  building  undertaken  in  each  city 
each  year  on  the  1913  cost  basis.  Through  the  irregular  heavy 
line  of  each  little  diagram  there  has  been  drawn  a  straight  line 
representing  the  general  trend  of  the  volume  of  building  during 
the  pre-war  years.  In  nearly  every  case  there  is  an  indicated 
shortage  in  the  past  six  years,  and  the  area  of  this  shortage  has 
been  shaded  to  show  its  relative  amount. 

[15] 


Diagram  5. — Nine  New  England  Cities.  Per  capita  value  of  permits  shown  by 
heavy  black  lines,  general  trend  based  on  pre-war  records  and  shown  by  straight 
dashed  and  dotted  lines,  and  computed  shortage  of  building  shown  by  shaded  areas 

[16] 


ROCHESTER 
Shortage,  $. ?  .year,s 
00     OS     10     IS 


10 


Diagram  6. — Ten  Middle  Atlantic  Cities.  ^Per  capita  value  of  permits  shown  by 
heavy  black  lines,  general  trend  based  on  pre-war  records  and  shown  by  straight 
dashed  and  dotted  lines,  and  computed  shortage  of  building  shown  by  shaded 

areas 


[17] 


GRAND  PAPIDS 
Shortage  2. 7  years 


20 


10 


Diagram  7. — Ten  East  North  Central  Cities.  Per  capita  value  of  permits  shown 
by  heavy  black  lines,  general  trend  based  on  pre-war  records  and  shown  by  straight 
dashed  and  dotted  lines,  and  computed  shortage  of  building  shown  by  shaded 

[18] 


ST.  JOSEPH  w 
Shortage  2.7  years 


KANSAS  CITY,  MO. 
Shortage  2.7  years 


MINNEAPOLIS 
Shortage  2.6  years 


Diagram  8. — Seven  West  North  Central  Cities.  Per  capita  value  of  permits 
shown  by  heavy  black  lines,  general  trend  based  on  pre-war  records  and  shown  by 
straight  dashed  and  dotted  lines,  and  computed  shortage  of  building  shown  by 
shaded  areas 

[19] 


00  05  10  15  20    00  05  10  15  20 


Diagram  9. — Eight  Southern  Cities.  Per  capita  value  of  permits  shown  by  heavy 
black  lines,  general  trend  based  on  pre-war  records  and  shown  by  straight  dashed 
and  dotted  lines,  and  computed  shortage  of  building  shown  by  shaded  areas 

[20] 


LOS  ANGELES 
Shortage  2.8  years 


Diagram  10. — Six  Western  Cities.  Per  capita  value  of  permits  shown  by  heavy 
black  lines,  general  trend  based  on  pre-war  records  and  shown  by  straight  dashed 
and  dotted  lines,  and  computed  shortage  of  building  shown  by  shaded  areas 


[21] 


In  every  case  a  computation  has  been  made  to  find  what  the 
normal  volume  of  building  for  1921  would  have  been,  and  the 
indicated  shortage  has  been  estimated  in  terms  of  this  1921 
normal.  For  example,  in  the  case  of  Providence,  there  is 
found  to  be  a  shortage  amounting  to  1.8  years  of  building 
construction,  calling  the  normal  amount  for  one  year  that  which 
was  estimated  as  normal  for  1921.  This  is  shown  in  the  first 
of  the  small  diagrams  on  page  16. 

These  estimates  for  individual  cities  have  been  made  by  the 
same  methods  that  have  been  described  in  connection  with  the 
computations  for  the  entire  group  of  50  cities.  The  amount  of 
permits  granted  each  year  from  1900  through  1921  has  first 
been  ascertained.  These  have  then  been  converted  to  show 
what  they  would  have  been  if  the  cost  of  building  had  remained 
during  the  entire  period  on  the  1913  basis.  The  next  step  was 
to  compute  the  population  for  each  of  the  twenty-two  years, 
basing  this  work  on  the  census  figures  for  1900,  1910,  and  1920, 
and  taking  care  to  allow  for  any  annexations  during  that  period. 

After  the  population  figures  were  found,  the  permit  figures, 
converted  to  the  1913  cost  basis  for  each  year,  were  divided  by 
the  population  figures  to  find  the  amount  of  construction  per 
capita.  After  this  was  determined  the  location  of  the  trend 
line  was  computed  by  the  method  of  least  squares,  and  in  nearly 
every  case  this  was  based  on  the  records  of  the  fifteen  years 
from  1901  through  1915. 

In  several  cases  the  records  of  cities  showed  one  or  two 
exceptional  building  years  which  could  not  be  used  at  their  face 
value  for  helping  to  determine  pre-war  trends.  Such  cases 
occurred  for  instance  in  San  Francisco  and  Baltimore  in  the 
years  following  their  great  fires,  when  building  activity  was 
abnormally  great.  In  these  cases  there  have  been  substituted 
for  the  abnormally  large  figures  of  these  exceptional  years, 
numbers  equal  to  the  average  of  the  other  years  of  the  pre-war 
period  used.  This  has  been  done  in  the  cases  of  the  two  cities 
mentioned,  and  also  for  certain  years  in  the  records  of  Cam- 
bridge, Mass.,  Reading,  Pa.,  and  Kansas  City,  Kansas. 

[22] 


There  were  several  other  departures  from  the  standard  pro- 
cedure. In  the  cases  of  Newark,  New  York,  and  Pittsburgh 
in  the  North  Atlantic  Division,  and  in  those  of  Denver,  Los 
Angeles,  Oakland,  and  Seattle  in  the  Western  Division,  the  trend 
line  was  based  on  the  records  of  the  sixteen  years  from  1900  to 
1915  inclusive.  In  the  case  of  Rochester,  the  years  from  1904 

TABLE  5.— INDICATED  SHORTAGE  OF  BUILDING  CONSTRUCTION 
IN  50  CITIES  AT  BEGINNING  OF  1922.  THE  SHORTAGES  ARE 
RECORDED  BY  YEARS,  TAKING  AS  ONE  YEAR  THE  VOLUME 
OF  CONSTRUCTION  ESTIMATED  AS  NORMAL  FOR  EACH  CITY 
FOR  1921 


City 

Rank  in 
descending 
order 

Years 
of 
shortage 

City 

Rank  in 
descending 
order 

Years 
of 
shortage 

Atlanta 

23 

2.4 

*Nashville 

49 

1.2 

Baltimore 

12 

2.8 

Newark 

42 

1.7 

Boston 

35 

2.0 

New  Bedford 

24 

2.4 

Buffalo 

20 

2.6 

New  Haven 

10 

3.0 

Cambridge 

43 

1.6 

New  Orleans 

45 

1.3 

Chicago 

4 

3.2 

New  York 

33 

2.1 

Cincinnati 

5 

3.1 

Oakland 

22 

2.5 

Cleveland 

39 

1.7 

Omaha 

28 

2.2 

Columbus 

36 

2.0 

Philadelphia 

37 

1.8 

Dayton 

46 

.8 

Pittsburgh 

34 

2.1 

Denver 

8 

3.0 

Portland 

1 

3.5 

Detroit 

40 

1.7 

Providence 

38 

1.8 

Fall  River 

32 

2.1 

*Reading 

48 

.2 

Grand  Rapids 

15 

2.7 

Richmond 

29 

2.2 

Hartford 

41 

1.7 

Rochester 

3 

3.3 

Indianapolis 
Jersey  City 

25 
13 

2.3 

2.8 

St.  Joseph 
St.  Louis 

18 
19 

2.7 
2.7 

Kansas  City,  Kan. 
Kansas  City,  Mo. 

47 
16 

.3 
2.7 

St.  Paul 
San  Francisco 

30 

2 

2.2 
3.4 

Los  Angeles 

14 

2.8 

Scranton 

26 

2.3 

Louisville 

9 

3.0 

Seattle 

6 

3.1 

*Lowell 
Memphis 

50 
17 

2.2 

2.7 

Syracuse 
Toledo 

7 
31 

3.1 

2.2 

Milwaukee 

27 

2.2 

Washington 

44 

1.6 

Minneapolis 

21 

2.6 

Worcester 

11 

2.9 

through  1916  were  used.  In  the  case  of  Portland,  Oregon,  it 
was  not  possible  to  be  sure  that  the  pre-war  records  indicated 
any  real  trend,  so  the  average  for  the  sixteen  years  from  1900 
through  1915  was  used  instead.  All  these  variations  from  the 

*  Surplus. 
[23] 


general  practice  were  adopted  because  special  conditions  in  the 
records  of  the  cities  seemed  to  indicate  that  they  would  produce 
more  trustworthy  results  than  would  be  secured  by  basing  the 
computations  on  the  data  for  the  fifteen  years  from  1901  through 
1915,  which  was  the  general  practice. 

Table  5  shows  the  amount  of  the  computed  shortage  of  each 
of  the  cities  and  its  rank  if  we  consider  the  city  having  the 
greatest  shortage  as  being  in  first  place.  At  one  extreme  is 
Portland,  Oregon,  with  an  indicated  shortage  so  great  that 
it  would  be  equal  to  the  normal  construction  during  3.5  years. 
At  the  other  extreme  are  Nashville,  Reading,  and  Lowell,  which 
show  no  shortage  at  all,  but  instead  surpluses,  ranging  from  0.2 
year  to  2.2  years. 

SHOKTAGES  BY  GEOGRAPHICAL  GROUPS 

The  records  for  the  different  individual  cities  have  been  brought 
together  by  groups  in  Diagram  11  on  page  25.  Here  the  per 
capita  expenditures  for  each  year  are  represented  by  the  up- 
right columns,  while  the  trend  lines  are  shown  as  in  the  other 
diagrams.  The  indicated  shortages  are  represented  by  the 
shaded  areas  filling  in  the  space  between  the  columns  showing 
the  actual  construction  of  the  last  six  years,  and  the  trend  lines 
showing  the  computed  normal  volume  of  building  for  that  same 
period.  These  shortages  range  from  1.9  years  in  the  Middle 
Atlantic  states  to  3.0  years  in  the  Western  group. 

In  three  of  the  groups  of  cities  the  general  trend  line  slants 
upward,  while  in  the  three  remaining  groups  it  slants  down. 
In  Diagram  4,  which  showed  the  per  capita  construction  for 
the  entire  group  of  50  cities,  it  slanted  up,  and  a  study  of  the 
individual  diagrams  will  show  that  in  18  cases  the  trend  is 
down,  and  in  practically  all  the  remaining  32  it  is  up. 

It  is  not  difficult  to  explain  the  general  tendency  for  the  per 
capita  expenditures  for  new  building  to  rise,  even  after  the 
figures  of  permit  values  have  been  converted  to  a  constant  cost 
basis,  which  is  in  this  case  that  of  1913.  This  tendency  to 
increase  apparently  reflects  the  rising  standard  of  housing  in 

[24] 


Diagram  1 1 . — Six  groups  of  cities.  Per  capita  value  of  permits  shown  by  columns, 
general  trend  based  on  pre-war  records  and  shown  by  straight  solid  and  dotted 
lines,  and  computed  shortage  of  building  shown  by  shaded  areas 


[25] 


this  country  which  manifests  itself  in  business,  industrial,  and 
public  building,  as  well  as  in  residence  construction.  During 
the  past  twenty-five  years  a  new  type  of  dwelling  house  has  come 
into  existence  in  this  country.  It  has  hardwood  floors,  steam 
heating,  modern  plumbing,  electric  lighting,  and  a  completely 
finished  basement.  In  ever-increasing  measure  these  features 
are  being  incorporated  even  in  the  houses  occupied  by  people 
of  the  most  modest  incomes,  while  every  growing  city  is  becom- 
ing surrounded  by  suburbs  largely  consisting  of  houses  far 
surpassing  in  beauty,  convenience  and  elegance  all  except 
the  very  finest  houses  of  a  few  decades  ago. 

Similar  changes  in  accepted  standards  are  taking  place  in 
our  office  buildings,  factories,  schools,  theatres,  and  public 
buildings.  The  general  standards  are  rising,  and  as  the  public 
taste  is  educated  to  demand  more,  the  average  level  of  expendi- 
ture per  person  goes  up. 

It  is  harder  to  explain  why  it  should  not  show  this  rising 
tendency  in  practically  all  the  cities,  instead  of  in  only  about 
two-thirds  of  them.  The  most  important  element  of  the  ex- 
planation is  undoubtedly  to  be  found  in  the  varying  rates  of 
growth  of  the  different  cities. 

If  a  city  should  have  a  stationary  population  over  a  long 
period  of  years,  it  would  require  new  building  construction  only 
for  the  purpose  of  replacing  old  buildings  when  they  became 
unsuitable  for  further  use,  or  the  occasional  erection  of  some 
new  structure  required  by  some  such  modern  development  as 
the  automobile.  Clearly  such  a  city  would  have  a  low  per 
capita  construction  record.  On  the  other  hand,  cities  that 
grew  with  such  unparalleled  rapidity  as  did  those  of  the  far  west 
from  1900  to  1910  required  for  a  time  a  much  greater  per  capita 
expenditure  than  they  could  over  a  long  term  of  years. 

RANGE  OF  AVERAGE  VALUES 

There  is  a  great  range  in  the  annual  average  value  of  the  new 
construction  undertaken  for  each  person  in  the  population  of 
these  cities.  Over  the  pre-war  period,  which  is  in  most  cases 

[26] 


the  fifteen  years  from  1901  through  1915,  the  city  of  Lowell, 
Mass.,  has  an  average  yearly  per  capita  expenditure  of  $12.07, 
while  at  the  other  extreme  is  Los  Angeles,  with  an  average  of 
$64.31.  The  average  of  these  figures  for  the  entire  50  cities  is 
$30.84. 

TABLE  6.— YEARLY  AVERAGE  PER  CAPITA  VALUE  OF  BUILDING 

PERMITS  ON  1913  COST  BASIS  IN  50  CITIES  FOR  THE  PRE-WAR 

PERIOD  FROM  1901  THROUGH  1915 


City 

Average 

City 

Average 

1.  Lowell 

$12.07 

26.  Milwaukee 

$30.27 

2.  Fall  River 

12.60 

27.  Indianapolis 

30.33 

3.  New  Orleans 

12.87 

28.  St.  Louis 

30.53 

4.  St.  Joseph 

14.47 

29.  Boston 

31.73 

5.  Reading 

14.86 

30.  Pittsburgh 

32.82 

6.  Kansas  City,  Kan. 

15.50 

31.  Newark 

33.19 

7.  Baltimore 

16.00 

32.  Detroit 

33.20 

8.  Nashville 

18.07 

33.  Memphis 

33.80 

9.  Scran  ton 

18.27 

34.  Denver 

34.43 

10.  Louisville 

18.47 

35.  New  Bedford 

34.54 

11.  Jersey  City 

19.27 

36.  Omaha 

34.93 

12.  Grand  Rapids 

21.87 

37.  Chicago 

36.73 

13.  Buffalo 

23.07 

38.  Atlanta 

36.87 

14.  Cambridge 

23.31 

39.  Rochester 

38.54 

15.  Toledo 

23.67 

40.  Washington 

38.87 

16.  Dayton 

24.00 

41.  Hartford 

41.80 

17.  Philadelphia 

25.07 

42.  Minneapolis 

42.13 

18.  Providence 

25.27 

43.  New  York 

43.44 

19.  Worcester 

26.33 

44.  St.  Paul 

43.53 

20.  Columbus 

27.20 

45.  Kansas  City,  Mo. 

50.20 

21.  Richmond 

27.73 

46.  San  Francisco 

51.42 

22.  Syracuse 

27.93 

47.  Portland 

52.00 

23.  Cleveland 

28.13 

48.  Oakland 

52.62 

24.  New  Haven 

28.13 

49.  Seattle 

57.31 

25.  Cincinnati 

28.47 

50.  Los  Angeles 

64.31 

These  figures  are  given  in  Table  6  on  this  page.  It  will  be 
noted  that  the  cities  having  the  lowest  averages  are  largely 
mill  cities,  or  southern  cities.  Those  having  the  highest  fig- 
ures are  mostly  cities  which  are  located  in  the  far  West,  and 
have  had  exceptionally  rapid  growths.  The  average  for  New 
York  City,  where  the  amount  of  construction  is  so  enormous 
that  its  value  in  many  years  is  more  than  one-half  as  great  as 
that  for  the  other  49  cities  combined,  is  relatively  high.  It 
amounts  to  $43.44,  and  in  only  seven  cities  is  the  average  higher 
than  this. 

[27] 


SHORTAGES  AND  SURPLUSES 

The  per  capita  value  of  permits  on  the  1913  cost  basis  was 
shown  for  the  50  cities  in  Diagram  4  on  page  14.  Through  the 
upper  part  of  that  diagram  there  was  drawn  a  slanting  line 
showing  what  the  normal  construction  in  each  year  would  have 
been  if  the  general  trend  of  the  pre-war  years  had  been  con- 
tinued over  the  entire  period.  In  that  diagram  this  trend  line 


SURPLUS     DR   SHDRTA&E     OF     BUILDIN& 
EACH    YEAR   FROM    I3DD    TD     I9EE 


1905 


Diagram  12. — Months  of  surplus  over  normal,  or  shortage  under  normal,  of 
building  in  50  cities  during  each  year  from  1900  through  1921 

was  based  on  the  actual  data  for  the  seventeen  years  beginning 
in  1900  and  running  through  1916. 

For  the  first  four  years  the  actual  amounts  were  under  the 
computed  normal,  as  indicated  by  the  trend  line.  During  the 
next  nine  years  the  actual  amounts  were  above  the  computed 
normal,  except  in  1908,  which  was  a  year  of  severe  business 

[28] 


depression.  All  the  other  years  show  deficiences  but  not 
serious  ones  until  we  entered  the  war  in  1917.  From  that  point 
on  building  construction  was  clearly  far  below  normal. 

Since  we  have  these  actual  records  which  are  in  each  case 
below  or  above  the  theoretical  normal  amounts  for  the  same 
years,  it  becomes  a  simple  matter  to  construct  another  diagram 
in  which  the  computed  normal  is  represented  as  a  level  line,  and 
the  shortages  and  surpluses  are  shown  below  or  above  that  line 
for  each  year.  This  has  been  done  in  Diagram  12,  on  page  28. 
The  values  of  the  diagram  are  in  terms  of  months.  In  1900  the 
actual  construction  was  only  two-thirds  of  the  estimated  normal, 
so  there  was  a  shortage  equal  to  the  construction  that  would 
normally  have  been  undertaken  in  one-third  of  a  year,  or  four 
months.  In  each  of  the  three  following  years  there  was  a 
shortage  equivalent  to  the  normal  construction  of  about  one 
month.  After  that  there  were  surpluses  for  four  years.  By 
these  same  methods  the  shortages  and  surpluses  are  shown  over 
the  entire  period.  In  1918,  when  the  Government  restrictions 
were  in  force,  the  actual  construction  was  only  about  one-fourth 
of  the  computed  normal,  so  there  was  a  shortage  of  nearly  nine 
months  in  the  amount  of  building  undertaken. 

If  there  is  a  shortage  of  building  each  year  for  several  years 
in  succession,  a  serious  shortage  accumulates,  and  it  may  take 
several  years  of  more  than  normal  building  to  wipe  it  out. 
This  is  what  appears  actually  to  have  happened  during  the 
period  under  consideration,  and  the  course  of  these  accumula- 
tions of  shortage  and  surplus  is  shown  in  the  final  diagram, 
which  is  numbered  13,  on  page  30. 

Diagram  13  is  constructed  on  the  theory  that  there  was 
neither  surplus  nor  shortage  of  building  at  the  beginning  of 
1900.  We  do  not  know  that  this  was  the  case,  but  we  do  know 
that  the  two  preceding  years  had  been  years  of  business  recov- 
ery following  a  depression,  and  years  of  considerable  building 
activity.  The  assumption  that  building  conditions  were  reason- 
ably in  balance  at  the  beginning  of  1900  is  probably  not  far 
wrong. 

[29] 


[30] 


During  1900  there  was  a  shortage  of  four  months,  and  this  is 
shown  on  the  diagram  by  the  black  column  below  the  normal 
line.  During  the  following  three  years  this  was  increased  by 
about  one  month  each  year  until  it  amounted  to  nearly  seven 
months  in  1903.  It  was  then  rapidly  cut  down  by  the  active 
building  of  the  following  years  until  a  surplus  existed  in  1906. 
This  increased  to  a  surplus  of  over  five  months  in  1912,  when  it 
began  to  shrink,  and  this  continued  to  1916,  when  a  condition 
of  balance  was  reached,  with  neither  surplus  nor  shortage. 

Then  came  the  great  shortages  of  the  war  and  the  post-war 
period,  and  the  accumulating  deficit  grew  until  it  was  more 
than  a  year  by  the  end  of  1918,  more  than  two  years  by  the 
end  of  1920,  and  2.44  years  by  the  end  of  1921.  If  this  estimate 
is  substantially  correct,  it  means  that  there  exists  in  American 
cities  an  indicated  shortage  of  building  construction  so  great 
that  the  building  industry  could  operate  at  nearly  25  per  cent 
above  normal  for  a  period  of  ten  years  before  it  would  entirely 
make  it  up. 

It  is  certain  that  the  building  industry  will  not  operate 
steadily  during  the  coming  decade  at  a  rate  that  is  25  per  cent 
above  its  normal,  for  that  is  not  the  way  in  which  new  construc- 
tion comes  into  existence.  It  will  have  its  periods  of  great 
activity,  as  it  is  now  having  one  in  1922,  and  it  will  have  dull 
periods  at  times  when  building  costs  are  too  high,  and  at  times 
when  business  is  depressed.  It  is  highly  probable,  however, 
that  the  industry  will  feel  the  stimulus  of  the  accumulated 
shortage  for  several  years  to  come,  and  perhaps  for  as  much  as 
ten  years. 

NATURE  OF  SHORTAGE 

If  we  accept  it  as  reasonably  well  demonstrated  that  there 
existed  in  these  50  cities  at  the  end  of  1921  a  shortage  of  build- 
ing construction  approximately  equal  to  the  amount  that 
would  have  been  normally  completed  in  about  two  and  a  half 
years,  we  can  estimate  from  the  records  of  actual  construction 
about  how  many  and  what  sorts  of  buildings  would  have  to  be 
erected  to  wipe  out  the  deficit. 

[31] 


From  the  building  records  of  these  cities  for  1920  and  1921 
figures  have  been  compiled  showing  the  different  kinds  of 
buildings  constructed  in  these  years.  By  using  these  figures, 
and  assuming  that  to  make  up  the  existing  shortage  would 
require  more  building  of  substantially  the  same  sort,  a  rough 
estimate  of  the  amount  of  construction  still  needed  becomes 
possible. 

From  this  estimate  it  appears  that  the  shortage  existing  at 
the  beginning  of  1922  was  such  that  it  would  require  about 
1,256,000  building  operations  to  make  it  up.  Of  these  opera- 
tions, about  703,000  would  call  for  the  erection  of  new  buildings, 
while  the  remaining  553,000  would  be  for  annexes,  additions, 
alterations,  etc.  Of  the  703,000  new  buildings,  about  303,000 
would  be  residential,  and  the  remaining  400,000  buildings  of 
other  sorts.  A  large  majority  of  these  latter  buildings  would 
be  garages.  The  303,000  residential  buildings  would  mainly 
be  one-family  houses,  but  a  sufficient  number  of  them  would 
shelter  more  than  one  family  to  furnish  accommodations  in  all 
for  about  424,000  families. 

The  further  one  carries  such  estimates  the  less  reliable  they 
become,  but  they  are  of  value  because  they  rest  on  carefully 
treated  evidence,  and  are  far  more  trustworthy  than  mere 
guesses.  In  a  rough  general  way  one  might  estimate  the  prob- 
able shortage  of  building  in  the  entire  country  by  multiplying 
by  four  the  figures  that  have  just  been  cited.  The  justification 
for  doing  this  would  be  found  in  the  fact  that  these  50  cities 
include  in  their  populations  nearly  one-fourth  of  all  the  people 
hi  the  country.  Such  a  series  of  estimates  for  the  whole  coun- 
try would  probably  give  results  somewhat  too  high,  for  these 
cities  are  growing  more  rapidly  than  the  country  as  a  whole, 
and  require  more  new  building.  They  probably  restricted 
construction  more  than  the  smaller  communities  did  during 
the  war  years,  and  so  incurred  relatively  greater  deficits. 

There  are  two  comments  that  may  well  be  added  concerning 
the  material  that  has  been  discussed  hi  this  report.  The  first 
is  that  not  all  of  any  shortage  such  as  those  now  existing  in 

[32] 


building  construction  in  our  cities,  has  to  be  made  up.  Part 
of  these  shortages  has  already  been  made  up  through  using 
old  buildings  longer  than  they  would  have  been  used  if  there 
had  been  no  war.  Such  use  is  like  the  extra  use  that  we  may 
have  given  a  pair  of  shoes  or  a  suit  of  clothes  during  the  war 
period.  After  we  had  made  these  garments  last  a  year  longer 
than  was  normal,  we  had  taken  from  them  a  certain  amount  of 
service  that  was  a  permanent  gain  and  that  did  not  have  to  be 
made  up.  On  the  other  hand,  the  fact  that  we  had  worn  them 
for  more  than  the  regular  length  of  tune  brought  us  into  the 
market  after  the  war  with  an  insistent  demand  that  could  not 
well  be  longer  postponed.  It  seems  probable  that  if  due  allow- 
ance were  made  for  the  extended  use  of  buildings  that  would 
under  ordinary  circumstances  have  been  replaced  some  years 
ago,  the  estimates  of  this  report  would  not  be  greatly  changed. 
The  second  comment  relates  to  the  reliability  of  the  method 
of  estimating  shortages  by  extending  a  trend  line  based  on 
previous  records  and  taking  it  to  represent  about  what  would 
probably  have  happened  under  ordinary  circumstances,  which 
means  in  this  case  what  building  would  have  been  done  if 
there  had  been  no  war.  This  method  gives  valuable  and  reliable 
results  about  in  proportion  as  the  material  being  studied  is  of 
such  a  sort  that  wide  fluctuations  do  not  characteristically  take 
place,  and  the  records  extend  back  over  a  relatively  long  period. 
In  the  present  case  the  mass  estimates  for  the  50  cities  are  con- 
siderably more  reliable  than  are  those  for  the  six  geographic 
groups,  and  these  in  turn  are  much,  more  trustworthy  than 
those  for  the  individual  cities.  The  separate  computations  for 
the  50  individual  cities  are  of  the  nature  of  prophecies  and 
have  all  the  uncertainty  that  must  affect  such  forecasts  even 
when  they  are,  as  in  this  case,  based  on  carefully  compiled 
data,  that  have  been  interpreted  with  care  and  caution. 


33] 


SUMMARY 

1.  Since  the  outbreak  of  the  war  in  1914  a  great  shortage  of 
building  construction  has  been  accumulating  in  this  country. 

2.  A  study  has  been  made  of  the  value  of  building  permits 
in  50  large  cities  from  1900  through  1921,  and  by  extending  the 
general  trend  of  the  pre-war  expenditures  an  attempt  has  been 
made  to  estimate  what  the  volume  of  new  construction  would 
probably  have  been  if  the  war  had  not  occurred. 

3.  The  difference  between  the  new  construction  actually 
undertaken  in  the  six  years  from  1916  through  1921,  and  the 
amount  that  probably  would  have  been  begun  if  the  war  had 
not  intervened,  is  so  great  that  it  is  equal  to  2.44  times  the 
estimated  normal  construction  for  1921. 

4.  The  existing  building  shortage  in  these  50  cities  is  so  great 
that  building  could  continue  at  about  25  per  cent  above  its 
normal  activity  for  ten  years  before  it  would  entirely  make  up 
the  deficit. 

5.  To  make  up  the  indicated  deficit  in  these  50  cities  would 
apparently  require  about   1,256,000  building  operations,   of 
which  703,000  would  call  for  the  erection  of  new  structures,  and 
the  remaining  553,000  for  additions,  alterations,  etc. 

6.  Of  the  703,000  new  buildings,  about  303,000  would  be 
residential,  and  the  remaining  400,000  would  be  buildings  of 
other  sorts,  of  which  a  large  majority  would  be  garages.     The 
303,000    residential   buildings   would   be    largely   one-family 
houses,  but  a  sufficient  number  of  them  would  shelter  more 
than  one  family  to  furnish  accommodations  in  all  for  about 
424,000  families. 

7.  Since  these  50  cities  include  in  their  populations  nearly 
one-fourth  of  all  the  people  in  the  country,  the  figures  that 
have  been  given  may  be  multiplied  by  four  to  give  a  rough, 
although  probably  high,  estimate  of  the  building  shortage  in 
the  entire  country. 

8.  Figures  showing  the  annual  course  of  the  cost  of  building 
since  1840  indicate  that  the  relative  increase  and  succeeding 
drop  in  building  costs  at  the  time  of  the  Civil  War  were  similar 

[34] 


to  the  corresponding  price  movements  during  and  after  the 
World  War,  but  the  latter  were  somewhat  more  violent. 

9.  There  is  a  great  range  in  the  average  annual  per  capita 
expenditure  for  new  buildings  in  these  50  cities.  The  lowest 
figure  is  $12.07  for  Fall  River,  the  highest,  $64.31,  is  Los 
Angeles,  and  the  average,  $30.84  for  all  the  cities. 


[35] 


353705 


Che 

Cleveland 
Company 

Capital  and  Surplus  $13,000,000 

Resources  $160,000,000 

Depositors  369,000 

Branch  Banks  48 

Member  of  Federal  Reserve  System 
Trustee  of  The  Cleveland  Foundation 


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Return  this  material  to  the  library 

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